retiring at 40, btl the best way?

[marieinlondon]

We are currently in our early 30s and want to retire in 10 years time. We have been working really hard to pay off the mortgage on our house and only have 30k left. We bought our place for 120k several years ago and is now worth over 300k. In a years time the clause from right to buy will end and we can finally sell it on and start planning our future.

We are planning on selling it next year and this will leave us with 280k ish in cash. We want to buy a slightly bigger place on a mortgage for about 450k using 150k deposit and then use the rest to buy two or three flats in good areas to rent out. I only work part time so take in just 8k, but my husband earns a heahtly 56k + bonus.

Can any one give me tips and advice? I want to remain in north London and have my investments in north London also. We plan to work hard for the next ten years to pay down the mortgages and then hopefully we will make enough to retire. Did originally post this in property but this seems to be the active forum here.

Am I crazy for thinking this is totally possible?

As an aside. Always intrigued as to whether those that play the immorality card on btl direct the same sentiments to those who hold shares in food producers and retailers. If not, why not?

Because i can pretty much source all the food i need for next to nothing if I have an allotment, learn to forage or just rock up late in the evening and buy stuff from reduced counter. Restricted Supply is hardly a problem in food.

I am more angry with our society that thinks housing speculation is a good thing than any given landlord. And ir is speculation. Every buy to let landlord is in it for the capital gain primarily - not income and not altruism. They may get a shock in the next few years once the snowvall effect of the ones who have taken on too much debt in their 'portfolio' have to sell.

As an aside. Always intrigued as to whether those that play the immorality card on btl direct the same sentiments to those who hold shares in food producers and retailers. If not, why not?

Quite.

I am a landlord. We also hold some shares in food producers.

Clearly we are immoral.

Figures don't add up - you are being a bit naive to think that profit will get you very much. You won't get enough to pay your own mortgage and buy another - the buy to rent mortgages are about to dry up too according to articles I read.

And ( as a side issue and not at all what you ask about) I find it obscene that having bought council property on a discount you plan to use the profit to become a property magnet/ exploitative landlord. I really really wish councils were not forced to sell their rental stock.

OP, have you considered drug dealing? I've heard that brings in a good return and think what you could buy with your equity release!

working you can build your own shelter too. You can live off-grid in the UK - the climate is benevolent, there's enough rain water, you can build composting toilets and buy solar panels to generate electricity so you can rant on forums.

you do talk about buying food though, even at late-night shopping. So someone is making money from your human need.

but thank you for at least trying to answer the question which normally makes the landlord-haters simply go 'waah! don't like you! you smell!'.

The housing market is over inflated and we are heading for a crash. Increasing your investment in a market prior to its correction is not the best idea in the world, but good luck if you can make it happen for you. I'd buy yourselves a tent and keep a few grand aside just incase you get it wrong.

Specialsubject - where can i easily live off grid in the uk without being told by planners and councils that I'm not being 'economically viable'? Because if there is a genuine way, I'm interested.

We lived off grid for 12 years and would do again if we moved back to the country again. It probably is easier in the country but you could do it anywhere I suppose.
The sense of freedom from huge bills is terrific and bartering services and goods saves you having to earn so much.
I think it was hard work though and very time consuming, but if you don't have a job and can spend all day being self sufficient then that's fine.

Op, you need to be more realistic about your figures:

A better plan is to stay in your current home once the mortgage is paid off and to buy one flat with a much bigger deposit that you have saved up. The rental income won't be enough to retire on but it will make life much more comfortable through middle age. Remember that you need extra money available for stamp duty, legal fees, accountancy fees, lremovals, repairs, tax bills, service charges, decorating ect as well as the cost of the mortgage. You might be able to retire at 60 but a mortgaged btl won't pay all your bills so you will definately need another source of income.

There is a very real risk with buying several properties that you won't be able to pay all your bills as you have spread your finances too thinly and will actually end up bankrupt.

You need to consider that property prices can go down as well as up, interest rates will certainly go up at some point, not all tenants will pay the rent on time, all properties will experience some wear and tear and btl involves a fair amount of stress at times.

I know someone who works in property management and he sees many naive people who sell up after a few years because they overestimated how much profit they would make by vastly underestimating all the costs involved. The reality is that most people don't make any profit at all during their first year or two of btl in London and the SE unless they are mortgage free.

specialsubject "but thank you for at least trying to answer the question which normally makes the landlord-haters simply go 'waah! don't like you! you smell!'."

that's interesting, I would have thought most people who are anti-landlord per se would also be anti-shares

for the record, I think there is a lot wrong with our lack of proper housing but I do understand why someone would BTL and the very good landlords I've had were BTLers who saw looking after the tenant as a responsibility.

I do know a couple who 'retired' from employed work at 40 with property as now their income. They have over 120 properties they buy one and sell one property every month, their business model involves holding a property for around 10 years. It is most definitely work though managing 120 properties, dealing with renovations, attending auctions ( all their properties are bought this way), dealing agents and solicitors for sales.
How did they get there? They both bought their first property in their early twenties and by the time they met and married they had over 30 between them. They both had 'city jobs' that funded their initial properties.

I'm feeling a certain pressure to stress that none of our money came from either property, btl or drug dealing.

I have no idea how you would even live day to day on that salary in London with 3 mortgages to pay off, never mind retire at 40, especially if you plan on having children. It's doubtful a lender would even give you those mortgages. I think you're living in cloud cuckoo land.

Firstly, well done with paying down your mortgage.

Owning your home mortgage free in your 30s means 50 years of living "rent" free. It's a huge bonus for your lifestyle and security.

If I were you, I wouldn't put a retirement age in just yet, but I would start a plan for what to do once the mortgage is paid off. Maybe a rental property is a good idea but I'd be very wary of borrowing more for your home plus several mortgages - too risky. What if your dh loses his job? I would either buy one property and use your wages and the rent to pay it off, or rent out the property you already own and upgrade for yourselves.

The other option is to be mortgage free and use the next 10 years to save/invest. With a spattering of travel and fun!

Don't risk losing everything by getting into too much debt.

working theoretically any house with some land could be off-grid - you don't need to build a new one and wreck some valuable green field land. OK, 'The Good Life' is a fantasy but the principle is sound.

As an example, many of us outside London happily live without mains drainage, and use woodburner heating by growing the trees, chopping them, stacking them, drying them and so on. Adding the solar panels and rainwater collection would be perfectly feasible given the money. No planning permission required for any of this.

you also plant and grow your own veg although total self-sufficiency would take a lot of doing.

I'm in no way self-sufficient, but in a power cut I have heat (from the woodburner) and cooking facilities (from an LPG bottle, we don't have mains gas). And candles. :-) We plan solar panels when the cost drops sufficiently.

If you want to maintain the same standards,you do need to buy internet services and the things you can't grow from those nasty people who make money. Sorry.

Much less risk involved in staying put and investing in stocks and shares ISAs. Why shackle yourself and your investment potential to living in a house bigger and more expensive than your needs? Why take up all your time managing property when you could increase your part-time hours to greater profit? Also if you really think property is a one way bet then you should look at collective investment schemes to spread your risk. Gross property returns are below 5% in most parts of the country. This will only cover mortgage interest and expenses together with buying and selling costs if you have a substantial deposit. To access competitive btl mortgage rates you generally need 40% equity. Even then the rate is close to 5% including fees. Interest rates are heading upwards. Tax relief on interest on btl has already been limited by the July budget. I would assume this is a direction of travel rather than the final position. I think the CGT position will also become more hostile.

surely having a job is bartering services in return for an IOU which you swap when bartering for goods you need?

So you want to sell a 300k property then buy a 450k one PLUS 2 flats in London on a 64kish income? Then retire in 10 years? I cant see how these figures add up at all?

Ito be blunt if you are relying on interest rates staying low and inflation eating away at debts you are in cloud cuckoo land.
No one forsaken interest rates of18% or of 0.5%both have happened.
Inflation as been steady recently but that hasn't always been the case and occasionally someone mentions deflation. That would be worse. London is in a property bubble at the moment how long that last is anyone guess. Could be another 20uears could be 2. Who knows. To the person who says that you alwaysareonly on property -many of us have lost money. What youean is that you don't know of anyone who has lost money.

You could make money out of property op. A lot do. But I think you would be as well to gen up on economics first.

Forsaw not forsaken. Phone thinks it's in a Victorian drama!

short memories..there have been two big property crashes in my recollection, and plenty of people in negative equity. The OP is in London where the market is different, but the interest rates will be the same. Like everyone else I've no crystal ball, and with our over-population I can't see London crashing too heavily - but other places can. Last bubble in 2006-2007 and plenty of people still not selling because they won't accept the price drop.

just because interest rates have been low for five years doesn't mean it will stay that way. Rates of well over 10% on mortgages have happened in the last 30 years. Repossessions....nasty.

aussie
'Owning your home mortgage free in your 30s means 50 years of living "rent" free. It's a huge bonus for your lifestyle and security.'

• it is a common misconception that once you are mortgage free you will live very cheaply

there is still council tax, insurances. utilities, maintenance to name just a few.

caroldecker

No, its totally different.
If you have a job you are paid with money which you then use to buy goods and services.
When bartering no money is involved.
My friend used to cut our hair for a free music lesson for her dd. We would keep count like this without using money at all.
Monetary value would come into I suppose.

morethan It is no different at all - you value a music lesson as the same as a haircut. Your friend could have charged £20 for the haircut and you charged £20 for the music lesson. You could have used beads or matches to keep count.
The huge disadvantage is when she wants weekly lessons and you want monthly haircuts and you cannot swap your excess haircuts with the bald man podiatrist you want to see.
As a society we have made this simpler by exchanging tokens (money) which all the people in the country accept. Money has no value except as an accepted medium of exchange.
The only advantage of bartering is tax evasion.